The slide in Calgary’s resale housing market continued in May and uncertainty about the new NDP government could keep buyers on the sidelines for another few months.
May marked the sixth consecutive month in which MLS sales declined, year-over-year in the Calgary market. It was the fifth straight month in which average prices declined on a year-over-year basis.
Sales were down 25.5 per cent from May 2014, at 2,190 transactions. The average price declined 1.5 per cent to $478,7790, while the median price was down 0.3 per cent to $433,000.
New listings also fell, down 26.7 per cent to 3,161. However, the number of active listings at the end of the month was up 16.1 per cent, to 5,342. Homes are also spending longer on the market — the average number of days to sell a listing was 41 in May, up from 27 in May 2014.
Don Campbell, senior analyst with the Real Estate Investment Network, said political confusion will be a factor over the next six months, as buyers watch for the NDP government to set policy — particularly for key industries in Alberta.
“What policies and announcements will the new government make in their first six months to provide stability and confidence to businesses, citizens and industry?” said Campbell. “The more clear they get the more that potential buyers can decide when to enter the real estate market and therefore prop up the demand side of the Calgary real estate market. Right now, the confidence is low and the clarity is low, post-election and therefore buyers continue to sit and wait.
“We can expect those December and January panic listings to expire, as many are six-month listing contracts, in June and July so we should also see homes coming back on the market at lower prices – or removed completely.”
Campbell said the Calgary housing market is performing exactly as expected after nine to 10 months of declining oil prices.
He said average prices continue to be relatively flat.
“This is to be expected, as those who listed in a panic when oil began to drop, especially December and January, were refusing to lower their expected prices, even as competition heated up and listings skyrocketed,” said Campbell.
“Number of sales is down significantly as buyers sat back waiting for two key occurrences. The first one was for sellers to start getting a little more desperate and move their expected sale prices down dramatically. This desperation has not occurred, except in a small segment of the market, especially luxury. The second key that the buyers were looking for was some sense of stability to arise in the oil and gas industry — and to date this has not occurred. Buyers have traditionally been more patient than sellers and so the waiting game continues.”
Campbell said another added component protecting the downside of the market is Calgary’s very low vacancy rates and high rents. A seller, no matter how desperate they may believe they are to sell, still needs an affordable — and more importantly, available — place to move to as the majority are not leaving Calgary region and the rental market remains tight.
Cody Battershill, a realtor with RE/MAX House of Real Estate in Calgary, said the year-over-year decline in city sales is continuing, but the market has improved significantly from the beginning of the year. In January and February, year-over-year sales fell by 38.9 per cent and 34.2 per cent respectively.
“It’s interesting because some people would say that the market’s crashing, that the market’s imploding,” he said. “We haven’t seen prices come off that much yet. I am seeing a lot more flexibility when negotiating with sellers, representing buyers, and vice versa.
“It’s interesting that the prices have continued to remain resilient . . . If you like (famed investor) Warren Buffett, he tells people to buy when everyone’s afraid or be contrarian. At the end of the day, you’ve got to rent, own or live in a box. You’ve got to live somewhere.”
Ann-Marie Lurie, chief economist with CREB, said new listings have eased, which is helping push the market to more balanced conditions.
“Sales levels have continued to be lower than what we typically see at this time of year,” said Lurie.
Economic uncertainty, she said, can prompt people to wait and see before making the decision to buy a home.
“With a new government, we really don’t know what their plans will be. It could be that people are waiting to see what that response will be and how they will impact business,” said Lurie. “Obviously when I’m looking at housing it’s really what will happen to the jobs scenario . . . Having continued weakness in the energy sector, I want to start seeing how it’s impacting employment. We’ve seen some pullback in employment, but it seems to be levelling off at this point.”
She said the new home market has started to record some gains in inventory, but the current level remains relatively low.
“However, the overall impact on Calgary’s housing prices will ultimately depend on the duration of the economic slowdown and the amount of inventory build-up in the new home sector,” added Lurie.